Colorado ranks third in the nation for the number of students defaulting on student loans. That’ll be on the minds of many CU Boulder students who will be in the audience when President Obama speaks on their campus Tuesday evening. It’s part of a three-stop tour including college campuses in Iowa and North Carolina. Mr. Obama wants Congress to stop an interest rate hike on a popular student loan. The issue hits close to home for many of Colorado’s college students. CPR’s education reporter Jenny Brundin says last year’s graduates owed $23,000 apiece on average.
Here is a transcript of Jenny Brundin's report:
Reporter Jenny Brundin: CU Boulder senior Brittni Hernandez says she’s in better shape than a lot of her peers.
Brittni Hernandez: My student loans are minimal compared to what I would say other students’ are, probably. Just under $15,000. But that sounds crazy for me to say that’s minimal because that’s a lot of money!
Reporter: Nationally, Americans now owe more on student loans than on credit cards. More than a trillion dollars, in fact. Hernandez didn’t want to get heavily in debt. Her mom and her sisters worked hard, scrimped and saved so both she and her mom could go to college. Hernandez earned scholarships to CU Boulder, but they didn’t cover the full four years. To do the stuff other students get to do - like study abroad, take summer classes, and enroll in a fifth year -she had to take out federally-subsidized Stafford loans, and she knows she will struggle to pay them off. Hernandez is appalled that a college education costs so much and has a message for members of Congress.
Hernandez: I want them to ask themselves, why are they in Congress, why do they continue to fight what they fight for what they fight for, why do they come to work every day, and if that has anything to do with the future of this country, and the future of their families quite honestly, then they need to stand up for education as a right.
Reporter: Hernandez’ debt burden may get worse. If Congress doesn’t act by this summer, any student who takes out a new Stafford loan will have to pay double the interest rates. They’ll jump from 3.4% to 6.8%. That also worries students like Rafael Arvizu-Derr, a senior at the University of Colorado Denver.
Rafael Arvizu-Derr : As I get set here to graduate, I do have a fair amount of student loan debt.
Reporter: He spoke at a student government meeting last week, where student leaders passed a resolution opposing a rate hike. In 2007, Congress voted to progressively lower the Stafford interest rate until it reached 3.4% this year. The reduction expires this July. The issue is a big one for Colorado students. 11.5% are defaulting on their student loans, compared to 8.8% nationally. Arvizu-Derr says that with $50,000 in student loans, he's worried about his dreams of becoming a teacher.
Arvizu-Derr : My passion for public service will take me a long way. Education will take me a long way. But with that paycheck going against my student loan debt, it’s like a brick wall.
Reporter: He’s working three jobs now, even as a full-time student. But what he worries about most is that a doubling of interest rates may keep new students from going to college altogether.
Arvizu-Derr: All of us in this room got the chance. We need to make sure that door’s open for the ones that follow.
Reporter: The issue is shaping into a political battle. Many Congressional Republicans like Cory Gardner, who represents Greeley and Fort Collins, say subsidized loans just add to the deficit. Gardner himself is still paying off a student loan, so he says he understands the hardship. But he maintains the core problem is not student loans but an economy that continues to struggle.
Corey Gardner: Half of college graduates are coming out without a job or underemployed, so if they’re paying three percent or six percent, they still can’t afford it no matter what it is.
Reporter: He says a broader question needs to be answered: Are college students getting the value they’re paying for? Barry Fagin is with the Independence Institute, a Colorado think tank that promotes economic freedom. He says no, largely because of subsidized student loans.
Barry Fagin: One of the reasons why tuition is so high is precisely because colleges can get away with it because students aren’t paying with their own money, they’re paying with monopoly money, they’re paying with someone else’s money.
Reporter: Still, studies predict that by 2018, nearly two-thirds of all jobs will require some form of higher education. That’s part of the message the President hopes resonates with young voters when he speaks at CU Boulder tonight. He’ll make his pitch to keep interest rates on student loans from doubling, part of his effort to win over that constituency. But his rival for the White House, Mitt Romney, yesterday announced he also supports extending the low interest rates for federal Stafford loans.